The Ins and Outs of Strategic Retention Marketing With Jess Chan

Jess Chan is the Founder and CEO of Longplay, a full-service retention and lifecycle marketing agency for DTC e-commerce brands. She is also the Founder and CEO of Backbone, an email strategy automation tool. As a former CMO of a multimillion-dollar DTC e-commerce company, Jess bootstrapped Longplay to seven figures in revenue within the first 18 months. She is a sought-after speaker, podcast guest, product developer, and consultant on topics like retention, lifecycle marketing, and progressive agency business modeling.

Here’s a glimpse of what you’ll learn:

From actuarial science to email and retention marketing: Jess Chan’s career arc
The foundational components of a retention marketing ecosystem
How to boost repeat purchase rates
Brand-consumer relationship strategies
Key metrics for retention marketing
Jess talks about the complications with traditional retention models
What inspired Jess to create her “diary of an entrepreneur” Twitter thread?
The process of fulfilling your potential
How Jess bailed a friend out of a Mexican prison

In this episode…

Retention marketing is an overlooked component of the sales cycle. While many brands claim to create robust retention models through email and SMS marketing, these strategies are merely channels within the consumer lifecycle. How can you foster lifelong relationships with your customers?

According to passionate retention marketer Jess Chan, an effective retention marketing model has two main aspects. These include various channels like email and SMS and the lifecycle journey, where brands retain customers by building subscription programs and generating repeat purchases. Rather than measuring ROI during the retention phase, you should analyze repeat purchase rates by assessing engagement and purchase percentages at various stages of the customer journey. This allows you to identify high-performing loyalty and retention strategies.

On today’s Up Arrow Podcast episode, William Harris speaks with Jess Chan, the Founder and CEO of Longplay, about lifecycle and retention marketing. Jess discusses how to boost repeat purchase rates, how to build relationships with consumers, and even reveals how she bailed a friend out of a Mexican prison.

Resources mentioned in this episode

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Sponsor for this episode

This episode is brought to you by Elumynt. Elumynt is a performance-driven e-commerce marketing agency focused on finding the best opportunities for you to grow and scale your business.

Our paid search, social, and programmatic services have proven to increase traffic and ROAS, allowing you to make more money efficiently.

To learn more, visit www.elumynt.com.

Episode Transcript

Intro 0:03

Welcome to the Up Arrow Podcast with William Harris, featuring top business leaders sharing strategies and resources to get to the next level. Now, let's get started with the Show.

William Harris 0:15

Hey everybody, William Harris here I'm the founder and CEO of Elumynt is the host of this podcast where I feature experts in the DTC industry sharing strategies on how to scale your business and achieve your goals. I'm really excited about the guests that I have today Jess Chan Jess is the founder of Longplay and Backbone, Longplay as a full service retention marketing agency while Backbone is the first email strategy automation tool. Both of these are for the DTC e commerce brands, just bootstrapped Longplay to seven figures and its first year and it has generated over $300 million in revenue for DTC brands. That's a lot of revenue. Just it's it's, I'm excited to have you here.

Jess Chan 0:50

I'm so excited to be here. Yes,

William Harris 0:53

and I think Raphael Paulin-Daigle over at split base is the one who introduced us to us. Raphael is absolutely a genius when it comes to CRO so I was excited to see that he recommends you as well, because that carries a lot of weight with me.

Jess Chan 1:07

I appreciate that. It's very flattered and honored to be recommended and excited to be here. Cool.

William Harris 1:13

I do want to go ahead. And real quick. We're gonna get into good stuff in a minute. But I want to give our sponsorship message here. This episode is brought to you by Elumynt. Elumynt is an award winning advertising agency optimizing e commerce campaigns around profit. In fact, we've helped 13 of our customers get acquired with the largest one selling for nearly 800,000,001 of them that IPO recently. And we were ranked as the 12th fastest growing agency in the world by Adweek. You can learn more on our website@elumynt.com. That's elumynt.com. That said, that's enough of the boring stuff on the good stuff. Just tell me a little bit about your backstory. What? Where have you come from that has brought you to who you are today starting these companies that are now very successful? What's that trajectory? Like?

Jess Chan 1:59

Yeah, I mean, kind of fast forwarding through childhood and high school years, I actually have a background in Actuarial Science and Economics and then a minor in Political Science. So that was like my original degree in college. And it's very, very quant based, very methodical thinking. I remember doing years of like theoretical multivariate calculus, where we never saw any numbers, all these points will come back kind of full circle into like the entrepreneur journey in a second. But I always think back on that Steve Jobs quote of like, you don't know how the dots are going to connect until you're looking back totally sounds kind of my background and midway through college went through a period of like panic attacks, depression, suicidal thoughts, just like not a great period. And also really realizing like I don't really want to be in a insurance company cranking out spreadsheets for this my life. So, and kind of getting out that getting out of that dark period and exploring what I want you to do next, I ended up stumbling into a job as a marketing assistant. And I was working two marketing assistant jobs actually, in my fourth year of college while finishing up school. The first was for the e-comm company. And then the second was for b2b SaaS company. So as doing both of those, and eventually, when I first when I graduated, they both offered me cmo positions, and ended up taking the one for the direct consumer e-comm company. And it's a company called best self Co. And it was just the perfect opportunity. at the perfect time, we were selling physical productivity tools to entrepreneurs, they had just finished a Kickstarter, so it was like still very early stage. But like, we had a lot of traction, like Young Hungry team, it was 2017 2018 when like, we could just do anything and everything worked. It was beautiful. And that really gave me a ground level like entry point into, you know, building an econ business working really closely with the founders. And also really seeing like, how to run a company as a CML. So that was kind of the early stage. And then eventually, I was going to entrepreneur events, everyone was kind of asking me like, hey, what, you know, what's your strategy around X, Y, Zed and building a business? And I would kind of literally show them or give them a breakdown or you know, tear down recommendations. And eventually it was like, Hey, can we just like hire you for consulting? I'm not sure let me just say yes to everything and then eventually became like, hey, the consulting is great, but we don't have time to do this. Like can you just do it for us? So I actually when I first started quote, unquote, Longplay, which was really more so freelancing, I said yes to everything I did like brand marketing, content marketing, both video scripts, Josh's book, like literally said yes to everything and eventually honed in on email marketing, being just no one else was really doing it at that time, in terms of specializing in it, and it was more scalable, sustainable, had about a moat around it. So I thought it was a better business model. So double down on email marketing goes up Longplay and then now obviously expanded more so to retention marketing, and then we just launched Backbone from that as well. So that's Tony Oh, stages of that entrepreneurial journey.

William Harris 5:02

That's awesome. I love it. You know, you talked about how eventually it turned into people saying, Hey, these are great ideas, but can you just do it as well. And I feel like that reminds me a lot of magicians in general to where you could you could show somebody how to do the trick. But being able to do it to the point where it looks like magic is very hard. And I know a lot of people are worried about sharing their their knowledge and their insights or their brilliance or their playbook online. But the reality is, I found and I'm sure it seems like maybe you have as well, just sharing your secret sauce, quote, unquote, out there. Most people are going to look at that and take that as an opportunity to to say, Wow, you really have thought this through and you understand it, can you actually just go ahead and do it that as well, instead of having somebody else tried to mimic it or do it? You know, as well? Yeah,

Jess Chan 5:54

I'm 100% agree. And I think a lot of early like, like you said, early stage entrepreneurs are scared of like giving away the secrets. And I was like, have kind of two different responses to that depending on the person. But on the one hand, it's like, just give as freely as you can. And it always comes back around. Like the best entrepreneurs, the people who have the best network of the best relationships can access anybody are the ones who are just so freely helping, wherever, whenever they can. And it's just really about like being as helpful as you possibly can. And like, somehow, somewhere a partnership will come to light. The other side of it is if you I always say like, if you're really as good as you think you are, you should be able to do this again. And you should continue to reinvent your IP, you should be continuing to stay ahead of the curve. It's like you can take all my secrets, like take everything I know because it's like, I might have taught you everything that I know. But I haven't taught you everything i i might have taught you everything you know, but I haven't taught you everything I know. And I think that's a really more of like an egotistical approach to it. But I do think that that's what allows you to continue innovating as an entrepreneur because you know, you kind of have to keep up with yourself if you're giving freely as well.

William Harris 7:04

It's almost like the All American Rejects do something about business, right? I'll give you my dirty little secrets. The real world, I wasn't really that good to punk or whatever. But so you also talked about how quant is going to come back a little bit later on. I don't know when but I'm excited about that as well, just because you're talking about some of the you know, multivariate calculus and everything. And I was doing some just just for fun quaternions and studying, you know, four dimensional and extra dimensional math. And I think there's a lot of just fun getting into maths, I don't know, when or where we weave that stuff back into here. But I'm excited for that potential. I do want to get into the meat and potatoes of the talk here too. Which is, you know, you and I were talking earlier the importance of a retention marketing ecosystem. And I liked that you you call it an ecosystem, as opposed to just retention marketing. It's like this whole breadth of stuff. A lot of people they say, oh, yeah, we do retention marketing, we do email. And then maybe if they're a little bit better, it's like we do email, an SMS. But then there's all these other components that also have to do with retention, marketing, what from an ecosystem standpoint? What are some of these other components that you're thinking of when you say, the ecosystem of retention marketing? Yeah,

Jess Chan 8:20

I am so excited to dive into this. Because I feel like people don't talk about it enough. Like we said, email SMS is really just channels of retention marketing. But we're really thinking about retention marketing ecosystem is kind of a few different components to it. One is like all the different channels and apps and kind of the, the infrastructure of how you retain a customer. And the second piece of it is actually thinking about it from a customer lifecycle mapping kind of standpoint. I think e commerce in general, as an industry is extremely behind and just like this way of thinking about business in a way that like b2b SaaS or b2c SAS things are is already you know, operating at that level, really about applying this like ecosystem and this customer lifecycle marketing approach to direct to consumer ecommerce. From an ecosystem standpoint, like email and SMS are great channels is also direct mail is also Facebook Messenger. There's also apps such as like quizzes, loyalty programs, referral programs, how do you generate word of mouth? How do you get your existing because customers refer friend or post about you online? How do you generate repeat purchases instead of in terms of like cross selling customers, getting them more bought into your ecosystem? And also, how do you launch subscriptions in a way that you're not just hey, we have a subscription available? But how are you introducing customers to subscription reducing churn, winning back customers? There's all these different components to this ecosystem and email and SMS really are like the tip of the iceberg of like at this point and how mature consumers are and how mature ecommerce is as an industry. If you're not doing email and SMS you're like light years behind. If you are doing email and SMS, that is just the baseline. And there's so much more to be doing. And I think the other thing you brought up, which is really important is like it's an ecosystem. So it's not about slapping on one channel, another channel. And it's not about like, Hey, we're doing retention because we have a loyalty program, we set it up. And it's, you know, buried in the footer of our website somewhere that someone can sign up for. How to how do all these different components feed each other? How does email help grow your SMS subscriber list? How does SMS feed people into joining a loyalty program? How do you use your loyalty program to retain subscription customers? It's about how these different components are really connected and feed each other.

William Harris 10:43

Yeah, and I think in order to do this, well, one of the things that I've noticed, and I've heard said before, I might butcher the quote, but if it doesn't get measured, it doesn't get done. And to a point, that means in order to do retention, marketing better, you need to have the right metrics that you're looking at for retention marketing is upside from all the other metrics that you might be looking at the other KPIs for acquisition. And I know that at least, from an advertising perspective, we really like to even bucket out some of the tactics we're doing on the ad side, based on whether or not they're already we require them. First of all, I look at those two main funnels, there's everything we're doing to get you to be a customer. So the acquisition side, and then there's everything that we're doing after you've become a customer, right. And there's intentional work that we put into that side of things as well, even on the ad side, where, you know, we call those LTV campaigns, our main focus oftentimes is how do we increase the LTV of those customers. And in order for them to become a long term customer, they have to get to their second purchase, that's one of the first things that has to happen at some point in time is they have to purchase number two, not number eight, right, they have to purchase their second time. And Alex Greifeld, she's a strategist, they're at No Best Practices actually posted about this on LinkedIn as well. Just the other day, you need to get that second purchase. That's the number one thing that you can do. But, and here's where I feel like a lot of people go wrong with this. So a lot of people think that that means the day after you've purchased something we're going to show you ads to buy again. And it's like, no, you've missed the point. Because the day after you purchase, you want them to fall in love with your brand, fall in love with the purchase that they just made, then when you come back and want them to buy again, they're excited about that. And I feel like that's where a lot of these other parts of the email and the SMS and the loyalty system like the they can tie into that before even not necessarily saying the purchase. You agree or disagree or what do you think?

Jess Chan 12:42

I completely agree. And I think, oh, man, I'm getting excited. Because you've touched on so many different points there. I was like my brain was like, I have like five different things that I could say here. And I think it's exactly this where even when we talked about like what gets measured, gets managed, I find with with retention marketing, the biggest mistake that a lot of ecommerce marketers make is they apply the same way of analyzing thinking about numbers and thinking about how quickly the return should happen and ROI that you should be doing at the top of the funnel, you apply the exact same mindset to retention. And they're actually two totally different things because you have this timespan factor that is completely different. And when we go back to something like a post purchase experience and getting that second order, most marketers ecommerce owners think about it as like, okay, cool, we have to get the second order. So what's like, What are the five different things you can do to get the second order as quickly as possible, and then our repeat purchase rate goes up. But what they don't realize is like, you might help get a few repeat purchases from that. But you're also burning out a bunch of people who might have bought from you that you're now turning off. And that is very perfectly measurable, even though you can look at it holistically and model it out. So there's an element of like what gets measured gets managed, but also you have to manage the things that can't get measured, as well. And this is the ecosystem, right? It's like we can measure each of the individual parts of the ecosystem to make sure it's all working. But there's this underlying like 30% 40% of like things that are good things that are happening that like fundamentally just cannot be measured, because it's about how these pieces connect together. So we find like, for example, postpartum structure is like one of the most like neglected areas of just very ground level basic retention marketing because, you know, a good post purchase starter sequence is surprising and delighting they have a great experience with your first product. You know, they want to talk about it with friends, they just like overall have a great like experience with the product and it increases the likelihood for them to come back again. But all of that is very, like that's not going to be able to be measured on an email revenue, open rate, click rate perspective, right. And sometimes staying silent is the best way to actually increase you know, the The brand relationship with your customer as well. So I think there's, there's all these different elements. And a lot of the time, ecommerce and marketing is around like, what input? What can we do? What can we do that's going to create the result that we want to do that we want to have. And what is its next tactic? Next thing that we can implement to make this thing happen? And like, quite frankly, like retention marketing is not a science. It's an art as with all of business building, art, it's an art. And like, not all of it is going to be measured perfectly each time. There's the quant

William Harris 15:32

valuable. Yeah. Yeah. So okay. post purchase, nurture. Sometimes you silence you were talking about that reminds me of one of the things that I talked to our team about is treating customers the way that you would, at least thinking about it like a relationship like it like an actual, like, boyfriend, girlfriend relationship, or whatever you whatever relationship you want to talk about here. But it's the idea of, let's say that you did go on a first date, you maybe could potentially increase your chances of a second date, if you ask the person like, while you're sitting down at dinner, you're like, Okay, so let's go and schedule our next date here right now, like maybe, maybe you will end up having more second dates on average. But the relationship is probably going to die off pretty soon as well, like, you're you may be impacting the long term, the LTV of that relationship, versus, you know, oftentimes, maybe at the end of the date, it's like, Hey, let it simmer a little bit, give it a day, let them like become intrigued and excited about the, you know, excitement of the product and about the excitement of who you are. And I think that that's something that if you can flip on that part of your brain and think about the relationship with the customer, like a real human relationship, then it allows you to think more methodically about how you're going about these nurtures and flows. I

Jess Chan 16:51

love that. Um, and I think you touched on a really good point where it's like, it's the dance, right? It's a dance between like, when you when do you lead when you back off, like when you say something when you let them speak like is an art. And I think, honestly, the one of the simplest ways to like really be able to like Master, this is just having that skill set of empathy. I think empathy is like one of the most underrated, most important skill sets as an entrepreneur. And empathy isn't necessarily like, sympathy. Empathy is just being able to literally put yourself in the other person's shoes, understand their perspective, understand their behavior on why they're doing something the way they are, so you can understand how they're going to receive what you're doing. Right? So if you're just kind of putting yourself in the perspective of the customer customers, like, Hey, I just bought something, what kind of experience what I have that would make me a raving fan? Like what kind of experience would I want to have that would make me want to post about this on social media and actually use the product. And one of the reasons I adult, and just just, it's just that simple and just reconnecting from a human standpoint, because we always forget that at the end, they all have businesses, just humans, you're either working with them, meeting them, selling to them, managing them, it's all people are

William Harris 18:07

machines that think that there are people now with AI, but that's true. Okay, so then I want to pull back a little bit because I had hinted at, you know, you need the right metrics for tracking these things. In your opinion, what are some of the key metrics that we should be tracking for retention marketing to know if we're doing a good job there? Is it just repeat purchase rate? Or what are your favorite ones to look at? Yeah,

Jess Chan 18:31

we actually look at the metrics for retention, marketing more some of our customer lifecycle standpoint, because so I'll kind of start off with how we typically measure things. And then we can talk about kind of the common mistakes that we see. The first one is we'll just take a list. Let's just take email, for example, to kind of keep things simple. Taking a look at what's what's the list size. So this is the number of people like your audience, you can actually email what percentage of your list has made a purchase from you before, and what percentage of your list has never made a purchase from you before, and just get your non purchaser purchaser right. And then who haven't purchased from you, what percentage of them have haven't engaged in the last three months have been engaged in last six months have been engaged last year. And that's gonna give you a very clear gradient on like, where your customer drop off is happening. And this goes back to what you were saying Alex was saying is like, we can talk about LTV, all we want, but if someone's not making a second purchase, I guarantee you're not making a third purchase. So we actually don't need all this data, we actually just need to know where people are dropping off in this ideal customer journey. And, you know, the other metrics that we measure essentially not just repeat purchases, because it's actually a very big term and you can't really do much with repeat purchase rate. What you can do, yeah, what you can do is more so like that's, that's what commonly references we purchase, right, right. And also total side tangent, but returning customer rate on Shopify is the most useless measure. trick I have ever seen, which is like 100%.

William Harris 20:01

Agree, I just didn't want to put you on the spot and say that so I'm page there.

Jess Chan 20:08

Everyone's I'm just like, your website visitors are returning customers? And what world is this useful information to make any sort of strategic decision and like, it's more of like to feel good. But I was that was a total side tangent. So in terms of, instead of measuring, like repeat purchase rate, we're measuring percent, what percentage of people who make a first purchase go on to make a second purchase, what percentage of those people a second purchase is going to make a third purchase? What percentage of your purchases go on to start our subscription? What percentage of those people renew a first time renewal a second time when you a third time? What percentage of people you know, don't come back after 90 days? So we're really breaking out, you know, instead of saying, like, we have an ideal LTV of this much, and this is our ideal customers, like break down exactly what milestones and behaviors you want them to take with you over a three, three year period, let's say, and just map out like, what percentage of them do and don't take these actions. And also, where's that drop off happening? You can extend this to like signing up for a loyalty program, posting about you on social media, joining a referral program, you can you can apply this methodology to all parts of the retention ecosystem. Yeah,

William Harris 21:23

and I think that's the key is once you have that setup, and you have those types of buckets. Now, if you're doing email and you decide to add SMS, you can see if you've made an impact on any of those things that are going to lead towards longer, you know, better lifetime value. And then when you add on a direct mail campaign, it's not just like that immediate ROI. But it's like, is this impacting the LTV by increasing my third purchase rate, or whatever this might be? Right? And so all of these different things that are coming along the line of what we need to see.

Jess Chan 21:55

Yeah, exactly. And since you kind of brought up all TPL, kind of dig into this a little bit, too, I find LTV to be a very funny metric. It's a good reference point, as I think about something but LTV is a is an equation like it is the result of multiple other actual metrics. And when we think about LTV, when we think about like, hey, we want to increase LTV, I'm like there's about like 10 different factors that increase LTV, and we cannot pull all 10 levers at once. So when we say increasing LTV, typically is what the general spray and pray type approach versus thinking about it methodically, which is like LTV is how many purchases they make how much they spend per order, you know, how frequently they come back with the timespan of that? And also, what's the average order value on the first purchase, second purchase third purchase? Well, there's just a lot lot there to unpack when we're really thinking like, critically about these metrics are very commonly referenced in ecommerce but usually are not like really dug into. That's

William Harris 22:49

the segmentation that I really appreciate as well, because the ARV on the first purchase versus the second purchase is usually wildly different. For some brands, you know, maybe they have a smaller first purchase, and then they have a bigger second purchase. For others, it's a bigger first purchase a smaller second purchase. And so when you're looking at LTV, like you said it can be very muddy as far as well did they did you actually just lower the cost for the barrier for them to enter by having a lost leader of sorts or whatever? Now they're just buying more on the second purchase? Or did you increase their first purchase by bundling something and so they're just buying more on that first one, but you know, their second purchase now drops off. And so maybe that's not as good as what you want for long term growth. And so there's a lot of ways to look at this, and it just gets buried. The the term that I like to use with this is Bayes theorem where you can have some lurking variables. And I've written about this on the ad side, but I haven't written about it on that side of things as well. But I, I feel like this is one of those things that shows up so much in people's data, and they don't know to look for it. But it's there. Yeah,

Jess Chan 23:50

and this and this is why I always bring up an ecosystem because everything is interconnected as if you think about like the planet's ecosystems, like you take out the bees. And suddenly, like there's a whole cascade of effects on like things that break. And it's the same thing. And retention marketing really the same on top of funnel as well. But it's like, we have a lot of clients or people come to us and says like, hey, we want to increase first purchase AOP it's like, we can do that. But if you don't let us look at the entire ecosystem, we will do that at the cost. Like you think a metric is going up. But 10 other metrics are going down, it's actually hurting you. And that's that's a common mistake that we see in terms of how typically ecommerce brands also incentivize vendors as well as their internal team members. Here are two KPIs for you to increase first purchase order value and increase your repeat purchase raising I can do that. If that is that is all I'm incentivized for I can do that and I will burn out your entire company. And that's always something we consistently warn brands against is like do not like you cannot tunnel vision that way, or marketing.

William Harris 24:52

I completely agree with you and this is where you and I talked about the idea of like long term success, you know, versus just going for like the tactic of the Day. And I think we're kind of already hitting on that in context. And so what are even on the retention side, you mentioned post purchase nurture, being one of the areas that a lot of people get wrong. What are some of the other areas that when you come into a brand, and I think I even saw Dr. Squatch, on your website, like, you've got some really awesome brands, when you come into these brands, because most of who we're really targeting towards here are brands that are, you know, trying to go from eight to nine figures, nine to 10 figures. So they're at least they have some level of sophistication already in place. What are the other issues that you see, typically, when you come into them from from, from a brand nurture standpoint, from a retention standpoint,

Jess Chan 25:44

they just have a great business model that's very easy for people to understand outside until you just really reference a lot of different things to play with. And always like, there's just as our business models were like, Oh, yes, like there's so much to strategically play with here are like some brands, like there's just less to strategically play with. So Dr. Swenk is a great one. And we actually have a case study on website, which is like they came to us, and we're like, hey, how do we increase six month customer lifetime value. So then it became this breakdown of like, lifetime value is huge thing. Six Month customer lifetime value is even a bigger thing because like which customers like there are so many different types of customers. So it's really about figuring out what levers to pull. So you typically find like at that the eight to nine, nine to like high nines, maybe even 10 figures these days. The couple things are one, you have to segment your customers, you have to pick out different customer lifecycle. So when we're even thinking about six month customer lifetime value, let's take Dr. Squatch, for example, we first started off by breaking it out into what are the four different major customer buckets. So there is one which is single purchasers, like people who just come onto your site, buy one product, or it may be a bundle. And that's it. So it's gonna be like your first customer group, your second customer group is going to be people who come onto your site and buy from multiple product categories. So maybe they buy like like soap and deodorant. That's, that's my bucket number two, or it is going to be people who have a quarterly subscription in the constructor Squatch. Fourth is going to be people who have a monthly subscription. So this was like the core four buckets of customer lifecycle that actually affected strategy. And then from there, we really just broke down, like what percentage of customers volunteer each of those buckets, because that's been dedicated, decide where we dedicate our resources and ROI, like, let's not and I'm just making up numbers here just to have no disclosure. But let's say we're like, hey, we can do a lot of work and monthly subscribers, but only like 2% of the customers are monthly subscribers. It's like, why are we even if we increase this by 300%, that's not going to really move the needle much for your business, right? So we really have to prioritize what levers to pull where you actually have the highest return. And sometimes like we want to find the buckets where we only need a 0.5% growth to have a you know, 100 million dollar like impact on the bottom line, right. And obviously, those are big numbers. But that's what we're looking for. From there, we're mapping out, okay, we want to map out Sipsmith customer lifetime value, let's map out the ideal customer lifetime value, or customer lifecycle over that six months. So it's like over six months, we want them to make their first purchase, we want them to expand to multiple product categories, because that's going to increase average order value. Because if we can get the impact of getting someone to, to subscribe to a single product versus they're buying two different types of products, but they're subscribing both to like that now you've doubled your lifetime value just from getting to try new product, right? So we're trying to figure out what some of those levers are to pull over a six month period, mapping that out on like, when does it make sense for it to upsell them to subscription? When does it make sense to cross sell them to a different product category? When does it make? And also what do they need to receive from a messaging standpoint to make those decisions? So like what when should we start educating them on haircare to hopefully have them add hair care to the next subscription. So those are the this is obviously a super high level overview on like the approach but that is how that is how granular and methodical your thinking used to be to get in that eight to nine figure range.

William Harris 29:02

Yeah, and that's exactly what needs to happen. I feel like it's very similar to solving a Rubik's Cube, that's an example that I give to people a lot of times where in order to solve the first layer of the Rubik's Cube, you almost just have to say this one, I want to move here and just do it, it's very simple. To solve the second layer, though you have to think a little bit more the algorithm to do so it's a little bit longer, we're like, I need to move this one without moving these ones, I gotta move this, this, this, this, this. Okay, got it. And that moves to that one piece. That's it, you just did these like four or five moves to move one piece where you needed it to be potentially right. But then they get into the third layer, that algorithm can become much longer, maybe it's eight moves to move one piece or whatever that might be. And so the idea and I'm not a speaker, there are people who can do that much faster than doing eight moves to one piece. But the idea here being that, you know, as you're growing and your brand is growing, the granularity that you're going to need in these metrics and these tactics needs to increase And you need somebody who is saying I'm looking at this out a more refined approach on each one of these different levels in order to get to that, that point where everything's operating at a point where you're nine, or even high 910 figure business.

Jess Chan 30:16

Exactly. And I think that's a really brings up a really great point is like at this point touch has worked with talk to so many CEOs founder different companies. And the biggest difference between like, seven, eight, and nine is like seven is like, you're still kind of throwing stuff on the wall and seeing what sticks. It's a little bit like random kind of looking for silver bullets. Eight is like you're getting relatively methodical, but it's still very channel specific thinking, which is we are optimizing email now. Now we're launching Tiktok. Now we're doing Snapchat, and they're still looking for those big wins by nine figures, it's like we realized there's probably no big wins anymore, especially in terms of E commerce, or they might expand to retail and things like that. There's no big wins anymore. It's really about increasing everything incrementally and consistently. And it's about having 1% changes in three, four or five different parts of the algorithm, not a 10% increase in one variable. Because at that point, you've already squeezed out anything that was low hanging fruit. Now it's about like incremental growth. So those are the biggest mindset differences, all sorts of approach to marketing that we've seen. Yeah,

William Harris 31:17

I'm with you. 100%. I want to also dig into a little bit about who you are, as a human being one of the things that we talk about on this podcast on every episode is the human side of the people on this. It's actually one of our core values as a company as well, as we talked about be human. And especially in the day of AI right now, the lines between what is human and what isn't seem to be blurring very interestingly, with a lot of different stuff. And so, I do want to dig into though, you know, what makes you who you are. And one of the things that you had me check out was your diary of an entrepreneur. Probably the longest Twitter thread I've seen in a very long time, where you're literally documenting out, you know, on almost on a daily basis, what it's like to be an entrepreneur, what inspired you to do that.

Jess Chan 32:12

I'm so excited to talk about this. So I'm starting, you know, second business now with Backbone, b2b SaaS, and in it, I want it was like really realizing that shifting back from operating a business and growing like an already stable scaling business to starting a new one is a wholly different mindset. Totally different, like place you have to be in. And it gave me a lot of nostalgia, like starting out one point, I was like, Man, I wish I like remember that like experience? No, it's so unique. So that was kind of part of it. And also, the other side of it was I find with entrepreneurship, we obviously talk a lot about how to build a business and you know how to scale. But I always bring it back to like the business as the means to the end, you know, and we all went into entrepreneurship for a specific reason, and everyone's different reason. But overall, it's like, we wanted to have the power to build a life that we loved, to like, live up to our fullest potential and have just like amazing experience of life, and business as a means to do that. But often, we get so confused in the entrepreneurial experience, that we end up sacrificing our day to day or like human experience to grow the business. And you end up miserable on the other side, and there's a whole thing, right? So this was really about bringing back like the human, it's like, what does it feel like to build a business because we can talk about scaling and numbers and hitting milestones all we want. But at the end of the day, like the milestone of even if you are successful, and you build that nine figure business like that is just a blip, like the moment you build $100 million business or the more you have an exit, that is a one second experience of like, I did it, and then 99% of the experience, everything from to get there and everything after that. And yeah, we optimized for this one, one second experience. So I really want to really kind of bring to light to kind of remind entrepreneurs also like start a conversation around it and all the challenging like mental, emotional, physical, psychological experiences in the journey of like building businesses like that, that is your life like that is what you are as a human.

William Harris 34:22

Yeah, no. And that's, that's so interesting, because I can definitely relate and I'm sure that most of the founders here of the E commerce stores that are listening, feel the same way where it does become sometimes all consuming. And I know I've talked to a lot of and we've helped 13 customers get acquired, and many of them as well as many other people that I just know, that have sold businesses. When they sell their business, they said it's just like they're selling a piece of their soul. I mean, it becomes your identity to a point and so I even just like that idea of you being able to document the thought process and what's going on and the psychology behind what you're doing and why and how you're feeling about these different things. That's a breath of fresh air to anybody who's going down this path, because they're likely the same things that they're dealing with that we all have wrestled with. You know, I've heard it said that you either have a people problem, like as you're scaling and whatever, like all businesses are same, even though we run different businesses, either a people problem, you have a process problem, where you have and I feel like there's another P, but for some reason, I'm like, it's a finance problem. But I don't know what the other P was there. But you know, it's like one of those three things. What's that? Yep, profit problem. Sure. But it's like you either have some type of an issue with one of those things, is how do you deal with that it in for sometimes it can be very emotionally charged, as far as how you work through those different things based on how you were raised or what you've experienced. And so I think it's interesting, and I like that you're documenting that out for people. Thank

Jess Chan 35:54

you. It's been so much fun. I think, the second time around, just remember the first time like, it took a piece of me, you know, and I was like I, at some point I was I just remember crying on the floor multiple times, and then getting up to do a sales call. You know, like, that was a very real experience. And I was saying, like, the first business really took like a chunk of me. And at some point, I was like, I can't I physically cannot do this anymore. I feel like this thing is taking like years off my life. Like is this even worth it? You know? And the second time around, I'm like, I am still so hungry to build, and I want to build continue building. And also like not doing it that way again, what would it look like to build a second time and be existing in a state of play the entire time, like if we're playing with Lego building a sandcastle, we're still building some really cool shit at the end of the day. And also, it's really fun along the way. And like, yes, you're gonna run into like, not finding the right Lego pieces. And you're gonna run into someone knocking out knocking down your sandcastle, and you're like, God, damn, I have to start again. But there's like an element of like, playfulness to all of that. And the challenges are so real. But the play is different in the spirit is different. I'm like, That's my hypothesis for myself. And the second phase is like, Can Can I build something huge, from a state of play in a constant state of like, just childlike curiosity and have fun along the way, and then, wherever it goes, you know, I've still won. And I think it's just a really fun thing to test. Yeah,

William Harris 37:19

it because it's also sometimes very easy. As the seasoned entrepreneur to tell people, it's like, Oh, don't let it consume, you don't let it be your life. You know, it's like, make sure you have the balance and whatever. The reality is, oftentimes, when you're, when you're on, you know, ground zero of building a company, sometimes it's almost necessary to be a little bit imbalanced. And that's hard to remember sometimes after you've gotten this where you're like, Oh, I've already been burned by that. So I'm remembering but remembering, it's like, okay, if you go through this for a second time, and you can call out how you're feeling and how you're thinking, it's like, probably realizing you're like, oh, there might be this strong desire to make it your life again, for a little bit. Be like, Wait, nope, I'm not going to do that. It'd be have fun with this. And I'm sure that that's something that I can relate to at least as well, too. Yeah,

Jess Chan 38:07

exactly. And I think yeah, I think like, essentially, like you said, going through this whole process is like, with when the with with Longplay, where it really got to a point where I'm like, hadn't made a tee and how amazing see, oh, she like runs the day to day like has that stuff on lock. I was able to have like, really like a work life, like separation by sudden, like, here's my career, here's my business, and I can use males. And I was like, oh, like I have found this like, nice, beautiful, like harmony thing. And then I thought I could continue that. So I have a second business I was like no to get from 01 used to be all in and but but what does it look like to be all in and be like, let it consume you but it's a really fun, playful way. Like not in a I'm not healthy. I hate myself, but I am no one like I'm like, I love myself. If this thing fails, I had fun building it. And also I'm all in on belief, but the coolest thing ever. And it's really about that like energetic shift the mindset shift more than anything else.

That's huge. What about let's just say similarly, in a similar vein, what do you fear?

What do I fear? I'm I'll give my like old answer. And that kind of where I'm at now, for a very long time building the first business with Longplay. My biggest fear was being home I had a very vivid image of like, being on my deathbed, and someone saying or me thinking like, Oh, she had so much potential, like that, like idea on lift potential was just like this thing. And like the core of me that is like, that would just be the worst ending. And that was what really what fueled me it was like, I don't want to unlock potential. I want to live up to my potential. And the fear of not doing that and like proving myself fueled Longplay. And recently, I mean, I've been doing years of inner work at this point, but I've actually been doing a lot of psychedelic work, a lot of inner work. And most of the a lot of shadow work. And actually all of that has essentially been like, leaning into and exploring and like sitting in the absolute worst fears and just being okay with it. So I'm like sitting and like, I'm 100%. Okay, if I died right now, and it was like, she has so much potential, like, you know what I live like I'm human. And really just being 100%. Okay, with like, anything that happens, I'm like, ready to die at any given point. And like, if everyone if I build something, and everyone's like, this is the worst company I've ever seen, like, You're terrible entrepreneur, like that is okay. Yeah, it's not my identity. So actually, at this point, it's like, they're the number of fears I have I fear cockroaches going away. But in terms of like, psychological mindset fears, it is really, there isn't really anything that's like really eating me up or like driving me at this point, which I'm very proud of, because it's taken a lot of work.

William Harris 40:51

Yeah, yeah. And I think that that's something that we do need to work on. As a general, just as society it is, it is very easy for those psychological fears to consume us. And then that keeps us from being able to enjoy and receive other good things in life. One of the things that I had for I've got three daughters, 1310, and seven. And in order to help them to understand that I had them hold on to some of their toys, right? And so it's like, white knuckled grabbing onto their toys kind of thing. So it's like, they can't fit anything else in there. And I don't remember exactly how I did this, but something along the lines was like, Okay, well, you know, what's the value of these toys? Or whatever? How much are they worth? Maybe it's $20 worth of toys or something? It's like, well, I got $100 bill here that I'm gonna give you that you could go buy whatever you want with. But you can't, you can't receive it right now. Because you're white knuckled holding on to this, these toys or whatever this is. And I think it was because they weren't sharing or something at the time, right? And just realizing that how many times do we do this in our own lives as adults, right? Where we're so focused on this business, like you just said, it has to succeed because my identity is wrapped up in this business. And my self worth is, and if I died, and it goes on my epitaph that like, I was not very, you know, I had an unmet potential that I didn't live up to, it's like, it'd be the worst thing in the world. It's like, so then we're almost so tight knuckled that we're not able to even receive some of the other beautiful things that are just entering our lives right at that moment, too.

Jess Chan 42:25

Yeah, exactly. And here's like, two really important points to that is, one is the, the idea of really kind of living in the meditative state and watching some of these thoughts where it's like, we're only human like, of course, these fears are going to come up. But the difference between them being like real fears versus like, random occurring thoughts that come up is like, can you live in a meditative state and essentially operate from a higher state of consciousness where you're like, wow, I see that fear coming up. Again, it's not affecting my behavior. I'm not panicking about I just see that thought crossed through. And that is really what the purpose of meditation in our work and spiritual work should be is it's not about meditating in the beginning of your day and feeling better. It's about meditating the beginning of your day, to practice what being in a meditative state feels like an operating your entire day in it. And the goal is to live 24/7 In meditation, like that is how you want to be operating. And it's like, then those fears come up, but it's not eating at you. And then the second piece of this too, is, you know, fear is such a, it's such an incredible fuel for getting off the ground, and it is such an unsustainable fuel to keep going. And you can only run away from something for so long. I'm like, I'd rather be pulled by pulled towards running towards something like what am I running towards? What am I excited about? Not one of my running away from and that's, I think, where people get burned out, they hit their ceiling, they get sick of something. They're like, I don't want to do this anymore. It's like, yeah, because being feared or fueled by fear is like an extremely exhausting way to live. And also, most people aren't even conscious of that. Yeah,

William Harris 43:56

I I'm with you. 100%. On that, I, there's a Bible verse. And I know that that can be controversial to bring up a specific spiritual text, but it's one that I happen to resonate with, where it talks about Pray without ceasing. And a lot of times, you know, people think of like prayer as something that you get down on your hands and knees, fold your eyes closed, or fold your hands, close your eyes, and it's like you do and then you get up and then you eat or whatever this might be right. But it is that idea of like you said, it's it's an existing state of being to be praying without ceasing. It's 24/7 to be meditative, without ceasing to be continually in this state of thankfulness and without fear at that same time moving forward instead of backward kind of approach.

Jess Chan 44:42

Yeah, I love that. And I think you also touched on a great point, which is like it's about getting back up again, right? It's a practice like that. And people get stuck on that with meditation and also beyond that, which is like, yeah, you meditated. And then you had your thoughts like pop in, and like I feel like couldn't meditate only noon. Oh, wasn't getting getting like getting yourself back on track when that happens. And same thing with entrepreneurship, like the failure of entrepreneurship does not happen when you like, like, make a mistake, it feels when you refuse to get back up again, if failure is more so for getting to be grateful and returning back to a place of gratitude, rather than having a type of resentment. But I do think it's very important to kind of like, I guess, like principle to live by or to kind of keep top of mind. This

William Harris 45:25

is a fun deep topic. But I do want to switch because we only have so much time and there was something else you brought up that I think is really fun, and is not even remotely as deep. You helped bail a friend out of a Mexican prison. I need to know the story because you haven't told it to me yet. Yeah,

Jess Chan 45:41

um, so we were such Yeah, we were at a we're going to an entrepreneur venture actually met this friend at baby bathwater mastermind. So essentially a group of like entrepreneurs in Croatia. Raphael, I believe, is also part of that group as well. And highly recommend masterminds is where I kind of met like, all my friends these days. I mean, that and then we were born to a second one. We were one Mexico, he like, flew in and he was, he was coming off of like, it was like, kind of during COVID two, so it's like, there's just a really weird time. And he was coming off of like, being in this really intense hunting trip where they like, you know, like, did sleep and all stuff. So it's like, he's a little, you know, delusional and Pat and there was like a hunting range and like, Texas, so he's like, repacking his bags, like go to Mexico, he leaves a box of bullets in his suitcase. And he randomly gets selected for customs checks. So it's like, what are the chances? And the the crazy part was, what is normal bullets in Texas is military grade bullets in Mexico, military grade military grade bullets, and it wasn't even got just military people. It's, you know, it's a box. Yeah. Like taking pictures. Like it was a raid, like, you know, like those pictures of like, cocaine raids and stuff, like, you know, they were they were treating it like a big deal. And they refused to even like, let him go like, the drove straight from the airport to jail. I was like, I was like, here's a Mexican jail. Like, this is not good. And then part of me is like, people get stuck in Mexico all the time, we can just bribe up and it's like, no, you can't, they were like, not able to be bribed, because it was like our like TV. Follow TV. And, and then I remember snuck in and, like went to come like, I remember bringing him like a book and some Topo Chico and some pistachios, like hugging him through the bars. It was like, so dramatic. And it was escalated, because they were like, we're not letting you out. And you're gonna have to go to trial in the state of Mexico for a month, go to trial. And if you lose, you go to jail for like three years. Like it was not like no joke. It was really like, this is really serious for how small this should be. And I remember going there and we couldn't tell we were like something something corrupted happening here. But we couldn't tell him he was like, assigned, like a like a like a like a legal like a lawyer kind of thing. And then also the cops and we thought the lawyer was like corrupt. Cops were corrupt. And how what actually happened was I stuck in stole his passport to like, allow him to cross the border back. And like, because if they held his passport is over, you know, so God's passport, and then how they actually how he actually got out was he mentioned he's like, Oh, I'm like, he's like, I'm like an online presence. And he's like, My people will know. They're like, wait, what, like Googled him and like, he's all like, it's not like a crazy big influence by any stretch, but enough that when you Googled him, because like YouTube videos on social media platforms, they're like, Oh, crap, it's become like a really bad sort like Press story. So that was main reason. They let him and he was still supposed to stay for a month and we like had to like pay for Airbnb. In order for him to like see, like what for them to let him out. And he was supposed to go to sober trial and still might have been jail for three years. And he literally sneaked across the border in like Tijuana or something like it was a wild story. And somehow we still made it to the event. And we were like, had this like, really beautiful moment, like hugging on the beach of like, life is so weird. Life is so crazy. And the kinds of stories I love as entrepreneurs, entrepreneurs, just craziest stories, right?

William Harris 49:30

Get interesting situations.

Jess Chan 49:32

Yeah, I also think it's always like we get ourselves into these weird situations that always end up okay, because we're all like pretty good problem solvers, but also the situation which just is like we're psychotic enough, it's out of business or psychotic enough to personal creations. So I and that's just a one of my favorite stories because it was like, such a, such a deep like, friendship bond and also so it's just a funny age now. So Only things look

William Harris 50:00

back at if ever there was a reason to advocate for building up your personal brand out of a Mexican prison. So branding,

Jess Chan 50:10

never a never phrase like a virus steal that dog. That's fantastic. You're like, even if you never get any business ROI out of it, you never know. You never know. From jail

William Harris 50:21

ward off. Yeah, the Gestapo, it actually just released an episode of the podcast with Goldie Chan, who talks a lot about personal branding, LinkedIn and Adobe and stuff. And so it's fresh on my mind this, this just went live a couple of days ago. So if you if you need some help on personal branding, there's an episode for that as well. Feel free to check that one out. The next question I wanted to ask you, again, completely unrelated, but getting into this because quantity, you talked about quantity, we talked a little bit about math. What is your favorite? Let's just say like, math thing, that you're like, why? Now? That's not right. Like blew your mind? And you're like, oh, that's just uh huh. I don't know. Like, that doesn't make sense. I don't agree with it. And the examples I would say, like Simpsons paradox, which I've written about, and based on which I've written about, and the other one for me, as you're thinking of yours, was when my brother Michael Harris, told me that 0.9 repeating is the same thing as one that's not approaching the limit of one is the same thing as the number one is just different ways of writing it. And I remember initially just being like, Oh, that can't be right. Like this has to be wrong. And I tried to desperately to try to disprove that. But there's three really great proofs that have at least three really great proofs that have already been used to prove that this is exact same thing, that they're just different ways of writing the same number. But it broke me for a little while, like I went down a really deep rabbit hole of trying to solve that this was not the case. Do you have a math thing that you're like, I really liked this one.

Jess Chan 51:54

Wow, this is like I've never been blindsided on a podcast. This one This one got me. I was like, I actually have no intelligent answer to this. And it's gonna kill me now. Cuz I know that there's something but I'll not answer your question, but still be related, which is basic math principles that are like, so complicated. Basically, I'm like, why is no like, and I think I was taught it so early on, that became like, a way of life. And I'm like, Why does everyone else not think like this? Like, for example, I remember when thinking that Scott, like really popular as a book. I was like, did everyone not think probabilistically? Like, of course, all of life is probability. Like, I just spent four years doing risk analysis, like everything. Was there any other way of looking at it. So like, that was like a really funny, like, kind of enlightenment moment of like, everything is probability, like everything, it's always like, if we're going to try to be friends with someone, if we're gonna go on this trip, or if we're gonna like, this, this model, if we're gonna do X, like it's always probabilistic. So that was like a big one. The other one is the concept of the expected value, or apply. So just remember, basic economics is like, hey, we have the probability of something and then like, the likelihood or the likelihood of something happening, and then the expected output, if that thing happens, it's multiply them together. And like that as expected value of like that particular life path of that light life choice. And like, that has always been like at a crossroads, I'm always goes back to the expected value. It's like, what's the likelihood of this happening? What's the upside? What's the downside? And we cannot guarantee anything that happens, but we can choose on them with highest expected value. And that includes like, you know, selecting, like, do we want to go with a riskier hire? Or do we want to go with a safer hire? And it really becomes like, well, what's the likelihood of each of them happening? And working out and also what is the upside if they do work out and like, that is how you make those types of decisions. So those are, those are kind of like two quick ones off the top of my head. The third one is actually statistical extrapolation. Like when people will take like the Shrek they, they map trajectory in all these crazy ways. And I'm really realizing, most of us, but humans are not very good at extrapolating exponential growth by any stretch. So I guess that's kind of like an answer to your question with the exponential growth, like really broke my brain. And like, kind of relate to that as compounding. But most people do not like just the level of extrapolation and how they make decisions or assumptions. Most people don't really think clearly around the thing that they assume and how they're mapping like the trajectory of a particular decision or particular life path. And those are super top of mind ones, but now, I want to be up at night thinking.

William Harris 54:44

But those are really good ones, though. Like, like, even just like you said, probabilistic thinking, your brain just works that way. And it like just broke your mind to think that you're like, you mean everybody doesn't just intrinsically think along probability.

Jess Chan 54:59

Yeah, I think that the idea that anybody thinks anything uncertain is certain in life, like the pursuit of certainty. And security is like, that's like blows my mind where I'm like, sure. I'm like, it's just a facade like, I'm like, I would rather know I have a 90% chance of the signal. Pretend it's 100% chance, like, then you're blindsided, you know. So I think that's always really interesting.

William Harris 55:24

I love it. And I think that helps you obviously, think through the concepts of retention marketing very well. And just makes it makes sense. You're like, Well, okay, if we do this, what's the likelihood of this happening? And if this happens, how much is that going to impact this algorithm? So that's a very, very helpful way to approach ecommerce growth, not to be too reductive of you know, the literal idea of this episode. But probabilistic thinking is a very useful skill for what you do on a day to day basis. 100%

Jess Chan 55:53

and the other side of that is like, I hedge everything, like, to some degree, you know, it's like when I think about how I got hurt is like, I did actuarial science and I'm like, I don't think that that's in the likelihood of this degree working. I was questionable. I'm gonna hedge it by like starting something new and like getting a marketing assistant job. I'm like, God, this marketing assistant job, but like, I don't know if I'm like 5050 I was from a full time job. Let me hedge it with another marketing assistant job. Job with another like business like it's always like, there's always layers. And I think that is how you can guarantee like, not like, quote, unquote, guarantee no failure, because like, you don't need any one particular thing to succeed.

William Harris 56:28

Yeah, you've limited the potential for downside, right. Just it is absolutely amazing talking to you. I've really enjoyed this. And if people want to follow you work with you connect with you. What's the best way for them to reach out stay in touch? Follow? Yeah,

Jess Chan 56:47

Twitter's gonna be the best place to find me. chat with me. So that I handle is there's @jjesschan with two J's. And then longplaybrands.com is the best place to reach me in terms of all working together. Awesome.

William Harris 57:01

Well, I really appreciate you talking today. Thank you for giving us your time and your knowledge. Thanks for having me. Thanks, everybody. Have a great day.

Outro 57:11

Thanks for listening to the Up Arrow Podcast with William Harris. We'll see you again next time. And be sure to click Subscribe to get future episodes.